Coro Energy plc, the Southeast Asian focused energy company, announces a revised regional strategy, including renewables, and releases its unaudited interim results for the six month period ended 30 June 2020.

Strategy

• Revised Southeast Asian strategy to include renewables and other low carbon energy sources and related technologies, with select opportunities already under review

South East Asia

• Significant resource upgrade for the Mako gas field, located on the Duyung PSC (Coro: 15% non-operated interest). Gross (full field) 2C resources have increased from 276 Bcf to 495 Bcf following an updated resource audit by Gaffney, Cline and Associates, on the back of a successful drilling campaign in Q4 2019

Corporate

• Significant reduction in corporate overheads aimed at preserving end of period cash balance of $3.3m
• Continued discussions with interested parties regarding the divestment of non-core Italian operations

Statement from the Chairman, James Parsons: Revised Strategy to include Renewables and other Low Carbon Energy Sources

The first half of 2020 saw unprecedented challenges for junior exploration & production companies, with the COVID-19 pandemic and other factors causing a significant and rapid fall in oil prices. In response, the Board acted quickly and decisively to reduce overheads and preserve cash, including reducing executive staffing, with Andrew Dennan stepping aside as the Company's CFO but remaining as a Non-Executive Director and the Company's former CEO leaving the Company. I am pleased to report that as a consequence the Company now runs on an annualised corporate overhead cost budget of $1.3m, a fraction of its 2019 level of $4.0m.

While commodity prices have partially rebounded from the lows seen in April 2020, headwinds remain and the Company is not immune from the challenges that continue to be felt across the sector and the overarching macroeconomic picture.   Notwithstanding those challenges, the Company has a 15% interest in the now proven Duyung PSC, which contains the Mako gas field, and provides an excellent platform for renewed growth in South East Asia now that at least the initial phase of the pandemic is behind us. 

The Company made good progress on the Duyung PSC during the first half of 2020, including reporting a significant resource upgrade following an updated resource audit performed by Gaffney, Cline and Associates ("GCA"). 2C (contingent) recoverable resource estimates increased to 495 Bcf (gross, full field), an increase of approximately 79% compared with the previous audit undertaken by GCA in 2019. In the upside case, the 3C (contingent) resources increased by approximately 108% to 817 Bcf compared with the previous audited figures. With GCA's confirmation of the latest upgrade, the Mako Gas Field has, on a 2C (contingent) resource basis, been shown to be one of the largest gas fields ever discovered in the West Natuna Basin and is, so the Company believes, currently the largest confirmed undeveloped resource in the surrounding area. The Board is still confident that opportunities in the oil and gas sector remain in the longer term, albeit they may well be confined to special situations, including the strong regional gas markets in Asia. Notwithstanding this strong progress at Duyung and belief in the long term opportunity set, the Company has not seen a recent material improvement in the market conditions required to finance the acquisition of the additional producing oil and gas assets needed to build a balanced, cash generative upstream E&P company.

The Directors continue to strongly believe in the potential of Southeast Asian energy markets where primary energy demand is forecast to continue increasing and where coal remains the primary source of electricity generation. The expected reduction in coal's share of the energy mix in these growth markets, to be replaced by gas and cleaner renewable sources, remains a key driver of the Company's strategy. 

Against this backdrop of growth in primary energy demand/a transition to cleaner energy and the prevailing market conditions limiting the Company's ability to pursue a purely hydrocarbon-focussed Southeast Asian energy strategy in the near term,  the Company has decided to broaden its strategic focus beyond solely hydrocarbons. The Board, given its extensive regional energy industry network, sees the potential for significant growth opportunities through also seeking to pursue the acquisition and development of alternative, low carbon energy sources and related technologies alongside gas opportunities as part of a wider Southeast Asian energy growth strategy which will now explicitly include renewables and potentially other sectors.

The Company is already reviewing select low carbon opportunities in Southeast Asia as part of its growth strategy. To support this strategic development and related ongoing activity, the Company has also engaged a renewables expert consultancy team to assist the Company with its review of opportunities in the clean energy sector in the region. This will complement the Board's extensive experience in the energy, M&A and fundraising space.

As we look to broaden our reach within the energy sector, we continue to focus on and believe in our 15% interest in the now proven Duyung PSC where we remain an active participant as the project moves toward a Final Investment Decision. In addition, the Company will continue to prioritise the divestment of its non-core Italian operations. Our new strategic approach will look to build on the platform provided by these activities. 

KeyFacts Energy: Coro Energy Indonesia country profile